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QR uses an activity based budgeting (ABB) system to budget product costs.

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QR uses an activity based budgeting (ABB) system to budget product costs. It manufactures two products, product Q and product R. The budget details for these two products for the forthcoming period are as follows:

The total budgeted cost of setting up the machines is $74,400.

Select TWO potential benefits of using an activity based budgeting system.

A.

Activity based budgeting allows the ranking of activities and the determination of how limited resources should be allocated across competing activities.

B.

Activity based budgeting provides a clear framework for understanding the link between turnover and the level of activity.

C.

Activity based budgeting is useful for the review of quality systems utilization.

D.

Activity based budgeting allows the identification of value added and non-value added activity and ensures that any budget cuts are made to non-value added activities.

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